Moatize to Zero Road
Mozambique's highway to the future
The Republic of Mozambique is a country in southeast Africa bordered by the Indian Ocean to the east, Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west, and Swaziland and South Africa to the southwest. It is separated from Madagascar by the Mozambique Channel to the east. The capital and largest city is Maputo.
Mozambique is endowed with rich and extensive natural resources. The country’s economy is based largely on agriculture, but industry, mainly food and beverages, chemical manufacturing, aluminum and petroleum production, is growing. The country’s tourism sector is also expanding. South Africa is Mozambique’s main trading partner and source of foreign direct investment. Portugal, Brazil, Spain and Belgium are also among the country’s most important economic partners. Since 2001, Mozambique’s annual average GDP growth has been among the world’s highest. However, the country ranks among the lowest in GDP per capita, human development, measures of inequality, and average life expectancy.
Shortly after independence, the country was plunged into a two decade long and violent civil war, that pitted opposition forces of the anti-Communist Mozambican National Resistance (RENAMO) rebel militias and the FRELIMO regime. This conflict, combined with sabotage from the neighbouring white-ruled state of Rhodesia and the apartheid regime of South Africa, ineffective policies and failed central planning, resulted in economic collapse. This period was also marked by a collapsed infrastructure, lack of investment in productive assets, and government nationalisation of privately owned industries as well as widespread famine.
Following an end to the civil war and the introduction of multiparty democracy in 1993, Mozambique has experienced an economic and investment boom. In the past decade it has consistantly shown an economic growth rate of between six and seven percent.
Despite these promising gains, the road infrastructure in Mozambique is still in need of significant investment if the country wants to assume its position as one of the leading economies of the region. In Mozambique, some communities are isolated during the rainy season, when bridges frequently collapse, and new roads are riddled with potholes because of poor maintenance and/or poor construction work. This affects trade even between neighbouring provinces, depriving small and medium enterprises of key markets. When direct and indirect costs are combined, Mozambican firms spend an average of 22 percent of their revenue on issues related to transportation infrastructure. Only about 25 percent of rural Mozambicans live within two kilometres of the road network. This is highly problematic in a country in which 70 percent of its population are rural dwellers, and whose agricultural sector contributes 22 percent to the GDP.
The Mozmbique Government, through their Roads Agency, Administra~ao Nacional de Estradas (ANE), has signed a Memorandum of Understanding with ETL to conclude a feasibility study, engineering, design and construct the Moatize to Zero Road. Moatize is a town and district located in the Tete Province. The road is located near the town of Moatize and near the Zambezi River. The total length of the road is 388 kilometres and costs are estimated at US$600 million.
Our role as development partners is to initiate private funding for the equity portion ETL holds. This amount is limited to 15 percent which ETL will re-invest directly into the project participation. Our sole investment criteria, is a successful project mandate and evaluation of the project and the bankability and nature of the risk by the government, shadow tolling and /or fuel levies to conclude the proposed capital plan. If we are satisfied by the investment grade, a call for further investment will be concluded through our financial partners (“Prime Investors”) who have a track record of successful delivery of capital infrastructure funding and consummate knowledge of public and private partnerships as well as the corporate capital for funding.